Gold Producer Builds Silver Resource in Golden Triangle as Market Deficit Persists

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• The Silver Institute's World Silver Survey 2026, researched and produced by Metals Focus, forecasts a 46.3-million-ounce silver deficit in 2026, the sixth straight annual shortfall.
• Spot silver traded near US$57.29 per ounce on October 19, less than half its January record of US$121.62.
• Contango Silver & Gold Inc. raised the indicated resource at its Kitsault Valley project in British Columbia's Golden Triangle by 93.1%, to 89.55 million silver-equivalent ounces, with 2026 drilling of more than 50,000 meters still to be added.
• At Lucky Shot in Alaska, recent drilling returned up to 140.23 grams per tonne (g/t) gold over 0.63 meters, ahead of a resource update in the first half of 2027 and a feasibility-level study targeting 40,000 to 50,000 ounces of gold a year.
• Contango's cash flow comes from its 30% interest in the producing Manh Choh gold mine, operated by Kinross Gold Corp., where analysts are watching costs ahead of third-quarter results in November.
• Cantor Fitzgerald rated Contango a Speculative Buy with a US$32 target on August 14, and Freedom Broker rated it a Buy with a US$30 target on September 10.

Silver has given back much of this year's record run, but the shortage behind it hasn't gone away. That makes the metal a growing draw for producers like Contango Silver and Gold Inc. (CTGO:TSX; CTGO:NYSEAMERICAN), a gold miner now building one of its biggest resources in silver.

Spot silver traded near US$57.29 per ounce on October 19, less than half its all-time high of US$121.62 set on January 29. Yet the market is on track for a sixth straight annual deficit. The Silver Institute's World Silver Survey 2026, researched and produced by Metals Focus, forecasts a 2026 shortfall of 46.3 million ounces (Moz), up about 15% from 40.3 Moz in 2025, according to GOLDINVEST.

Those deficits add up. The market has drawn roughly 762 Moz from above-ground stocks since 2021, GOLDINVEST noted, calling the structural deficit "real" and "widening."

Forecasters still see room for higher prices. The LBMA's 2026 Precious Metals Forecast Survey averages about US$79.57 per ounce, and J.P. Morgan's 2026 average forecast is about US$81, Skillings Mining Review reported.

Silver supply is slow to react to higher prices because about 70% of it comes as a by-product of mining other metals, according to GOLDINVEST. Metals Focus expects mine output to stay broadly flat in 2026, the report said, and forecasts total demand slipping about 2% to 1,112.6 Moz, while supply falls about 2% to 1,066.4 Moz.

Demand is shifting rather than fading. Solar manufacturers are using less silver per cell, but electronics, vehicles, data centers, and grid infrastructure continue to support industrial use, according to Skillings. In February, the Silver Institute forecasted that physical investment in coins and bars would climb about 20% this year to a three-year high.

Gold, the metal behind Contango's cash flow, has held up better. It traded in October about 25% below its record of roughly US$5,590 set on January 28, according to MetalCharts.

Central banks remain steady buyers. They added 289 tonnes of gold in the second quarter, up 62% from a year earlier and a record for a second quarter, according to the World Gold Council. Poland and China led the purchases. In the council's annual survey, 89% of central banks said they expect global gold reserves to rise over the next year, and a record 45% planned to increase their own holdings.

"Central bank sentiment towards gold remains exceptionally strong," the council said.

The two metals also move together. With gold near US$4,180 and silver near US$58 on October 19, the gold-silver ratio stood at about 72, meaning an ounce of gold bought about 72 ounces of silver, USAGold reported.

Contango describes itself as a North American emerging mid-tier precious metals producer, developer, and explorer. It took its current form when Contango Silver & Gold Inc., formerly Contango ORE, Inc., completed its merger with Dolly Varden Silver Corp. on March 26, adding Dolly Varden's Kitsault Valley silver-gold project in British Columbia's Golden Triangle to Contango's Alaska gold assets.

The company's cash flow comes from a 30% interest in the producing Manh Choh gold mine in Alaska. Kinross Gold Corp. (K:TSX; KGC:NYSE) holds the other 70% and operates the mine. As of December 31, 2025, Manh Choh held proven and probable reserves of 634,000 ounces of gold at 6.8 grams per tonne (g/t), with 190,000 ounces attributable to Contango, according to its annual report.

Kitsault Valley is the company's largest resource. Its updated estimate shows 89.55 million silver-equivalent ounces in the indicated category, from 7.66 million tonnes grading 363 g/t silver equivalent (AgEq), plus 64.92 million AgEq ounces inferred from 6.31 million tonnes at 320.26 g/t AgEq.

In Alaska, the leased Johnson Tract project holds an indicated resource of 1.05 million gold-equivalent ounces from 3.49 million tonnes grading 9.39 g/t gold equivalent. The wholly owned Lucky Shot project holds 105,000 ounces of gold indicated at 14.5 g/t and 25,000 ounces inferred at 9.5 g/t, from a 2023 estimate the company plans to update.

Contango's indicated resource at Kitsault Valley rose 93.1% from its 2023 estimate, according to a September 22 release. The update covers 1,454 holes, but none of the more than 50,000 meters drilled in 2026, which will go into another update planned for the first half of 2027.

"Kitsault Valley continues to grow, both in scale and in confidence," Chief Executive Officer Rick Van Nieuwenhuyse said. An Initial Assessment with preliminary economics is planned for later in 2027.

On September 25, Maxim Group analyst Tate Sullivan reiterated a Buy rating and raised his price target to US$35.

That 2026 drilling continues to hit high-grade silver. In results released September 15, hole DV26-480 at Torbrit returned 506 g/t AgEq over 13.90 meters, and hole DV26-494 at North Star returned 807 g/t AgEq over 4.96 meters. The company said silver accounts for more than 90% of the AgEq grades.

At Lucky Shot, Contango reported on October 6 that hole LSS26018 cut 140.23 g/t gold over 0.63 meters and hole LSS26021 returned 18.16 g/t gold over 3.65 meters. All intervals are downhole lengths. Drilling of the newly discovered KM vein began on September 16, with assays expected in Q4, and underground development is about 54% complete. Van Nieuwenhuyse said the company plans a feasibility-level study after the resource update, targeting a five-year mine plan producing 40,000 to 50,000 ounces of gold a year.

According to MarketBeat, National Bank Financial initiated coverage on October 8 with an Outperform rating.

Chris Temple of The National Investor wrote in his September 27 newsletter that Contango "is one of the most robust economic stories in precious metals anywhere," calling Manh Choh "one of the highest-grade open-pit gold mines in the world."

On September 25, Maxim Group analyst Tate Sullivan reiterated a Buy rating and raised his price target to US$35 from US$28, according to TipRanks.

Freedom Broker analyst Vitaly Kononov maintained a Buy rating and US$30 target in a September 10 flash note, with the stock at US$19.78. He called the September 8 project update broadly positive, with programs at all four main assets on schedule and within budget.

"Running three simultaneous field campaigns and delivering more than 50,000 meters of combined drilling in a single season, without missing a stated milestone, is a genuine execution signal for a company this size," he wrote.

Kononov said Lucky Shot's high-grade intercepts support advancing the project toward feasibility-level design, though the study has slipped from the first half of 2027 to later that year. The remaining surface assays he flagged as a catalyst came out on October 6.

His main concern was Manh Choh's second-quarter AISC of US$2,877 per ounce, well above the long-term target, and he called November's third-quarter results the key near-term catalyst. His target uses a 0.8x price-to-net-asset-value multiple across the four deposits.

Cantor Fitzgerald analyst Mike Kozak maintained a Speculative Buy rating and US$32 price target on Contango in an August 14 report, with the stock at US$19.48. He called second-quarter results mixed: higher production and derivative gains helped, but Manh Choh's processing of lower-grade ore during its transition to the South Pit kept costs high.

Contango's 17,000-ounce share of first-half Manh Choh production trailed full-year guidance of 40,000 to 45,000 ounces, Kozak noted, and all-in sustaining costs (AISC) of US$2,830 per ounce topped the guided US$2,200 to US$2,300. The company ended the quarter with US$89 million in cash and kept its guidance.

About 10% of Contango is held by insiders and about 45% by institutions. 

Its market cap is CA$716.73 million with 33.45 million shares outstanding. It trades in a 52-week range of CA$20.13–CA$40.06.

What is the outlook for silver?

The Silver Institute's World Silver Survey 2026, researched and produced by Metals Focus, forecasts a 2026 deficit of 46.3 million ounces, up about 15% from 2025. About 70% of silver comes as a by-product of mining other metals, so supply is slow to respond to higher prices.

What kind of company is Contango?

Contango describes itself as a North American emerging mid-tier precious metals producer, developer, and explorer. It formed through the March 2026 merger of Contango Ore and Dolly Varden Silver and holds gold assets in Alaska and the Kitsault Valley silver-gold project in British Columbia.

What are Contango's main resources?

Kitsault Valley holds 89.55 million silver-equivalent ounces indicated and 64.92 million inferred. Johnson Tract holds 1.05 million gold-equivalent ounces indicated, and Lucky Shot holds 105,000 ounces of gold indicated and 25,000 inferred. Contango's 30% share of Manh Choh reserves is 190,000 ounces of gold.

What are the next catalysts for Contango?

They include third-quarter results in November, KM vein assays at Lucky Shot in Q4, updated resource estimates for Lucky Shot and Kitsault Valley in the first half of 2027, and a Kitsault Initial Assessment later in 2027.